2025 (7) TMI 1630 - SC - Indian Laws

Jurisdiction for Section 138 N.I. Act lies with court where payee's bank branch is located, per Section 142(2)(a)

The SC held that jurisdiction for offences under Section 138 of the N.I. Act lies exclusively with the Court within whose local jurisdiction the branch of ... Dishonour of Cheque - requirement file his complaints in relation to offences punishable under Section 138 of the Negotiable Instruments Act, 1881 - territorial jurisdiction for instituting a complaint in relation to dishonor of a cheque - HELD THAT:- Section 142(2)(a) of the N.I. Act makes it clear that an offence under Section 138 thereof should be inquired into and tried only by a Court within whose local jurisdiction, if the cheque is delivered for collection through an account, the branch of the bank where the payee maintains the account is situated. This provision, as it stands after its amendment in 2015, was considered in Bridgestone India Private Limited vs. Inderpal Singh [2015 (12) TMI 777 - SUPREME COURT] and this Court affirmed that Section 142(2)(a) of the N.I. Act vests jurisdiction apropos an offence under Section 138 thereof in the Court where the cheque is delivered for collection, that is, through an account in the Branch of the Bank where the payee maintains that account. Therefore, once it is established that, at the time of presentation of the cheques in question, the appellant maintained his account with the Kotak Mahindra Bank at its Bendurwell, Mangalore Branch, he was fully justified in filing his complaint cases before the jurisdictional Court at Mangalore. The understanding to the contrary of the learned Magistrate at Mangalore was erroneous and completely opposed to the clear mandate of Section 142(2)(a) of the N.I. Act. The High Court proceeded to confirm the erroneous order passed by the learned Magistrate under the wrong impression that the appellant maintained his bank account at the Opera House Branch of the Kotak Mahindra Bank at Mumbai. The impugned order is set aside - appeal allowed. ISSUES: Whether the complaint under Section 138 of the Negotiable Instruments Act, 1881 can be filed before the Court having territorial jurisdiction over the branch of the bank where the payee maintains the account.Whether the Court's jurisdiction is determined by the location of the drawee bank branch where the cheque is presented or the branch where the payee's account is maintained.The correctness of the Magistrate's and High Court's orders returning the complaint for lack of territorial jurisdiction based on the location of the drawee bank branch. RULINGS / HOLDINGS: The Court held that Section 142(2)(a) of the Negotiable Instruments Act clearly vests jurisdiction in the Court within whose local jurisdiction the branch of the bank where the payee maintains the account is situated, and not the branch where the cheque is presented for collection.It was established that the payee maintained his bank account with the Kotak Mahindra Bank at the Bendurwell, Mangalore Branch, and therefore, the complaint was rightly filed before the Court in Mangalore.The Magistrate's order returning the complaint on the ground that the drawee bank was located at Mumbai was erroneous and opposed to the clear mandate of Section 142(2)(a) of the N.I. Act.The High Court erred in confirming the Magistrate's order based on the incorrect assumption that the payee maintained his account at the Mumbai branch.The appeals were allowed, setting aside the impugned orders, and the Magistrate at Mangalore was directed to entertain and adjudicate the complaint cases expeditiously in accordance with law. RATIONALE: The Court applied the statutory framework under Section 138 and Section 142(2)(a) of the Negotiable Instruments Act, 1881, as amended in 2015, which governs the territorial jurisdiction for offences relating to dishonour of cheques.The Court relied on the authoritative interpretation in Bridgestone India Private Limited vs. Inderpal Singh, which affirmed that jurisdiction lies where the payee's bank account is maintained, not where the cheque is presented.The Court corrected the factual misunderstanding regarding the location of the payee's bank account, emphasizing that the account was maintained at the Mangalore branch, notwithstanding the cheque's presentation at the Mumbai branch.No dissent or doctrinal shift was indicated; the judgment reaffirmed established principles governing jurisdiction under the N.I. Act post-amendment.